A new government scheme offers long-term loans for energy-saving measures but
this couple were told their failing windows did not qualify - and were
shocked by the interest rate.

For Trina Lynskey, the Government's Green Deal is already proving not all that it was cracked up to be. Ms Lynskey, pictured here with her partner, Scott Barkwith, became interested in the Green Deal after buying her first home.

"My partner and I bought our first house in November and it needs total renovation," she said. "We want to make it as energy efficient as possible while maintaining its character, so when I heard of the Green Deal I thought it sounded like a good scheme, considering the costs we would be facing."

The Green Deal is a government-backed scheme that provides loans to households so they can invest in energy-efficiency measures, such as boiler upgrades, wall or loft insulation or double-glazed windows. There is also the potential to get financial assistance to install energy generators such as solar panels and wind turbines. In theory at least, the cost of borrowing this money should be more than covered by reduced energy use, with the repayments made through your electricity bill.

However, just weeks into the process, the couple say they are unimpressed with the scheme.

Anyone interested in taking up the Government's offer first needs a Green Deal assessment. Many different organisations – including energy companies, DIY stores and local tradespeople – are authorised to do this. After the assessment, you will be given recommended improvements that are appropriate for your property and an indication of payback time.

The next step is to approach one or more of the 400 or so Green Deal providers for a quote for the installation of one or more of the "recommended measures". You are entitled to shop around with your assessment, so people are generally advised to get a minimum of three quotes.

Once you have agreed the work, you will receive a Green Deal Plan, which is a contract that sets out the work that will be done and list the repayments to be made.

The amount you can borrow will vary, but the Government estimates that households won't be able to borrow more than £10,000 as to do so would make it tricky to meet the official "Golden Rule" – that the expected financial savings must be greater than the cost of the improvements.

The couple assumed that the property would need internal and external wall insulation, new radiators and windows and draught controls, so they were surprised with the recommendations they were given after the initial assessment visit.

"The assessment process is flawed," said Ms Lynskey. "We have plastic/UPVC windows that are over 20 years old and some of the double glazing has been compromised. Some windows have black mould and gaps between the opening sashes and frame." But she said that because these windows were technically "double glazed", they didn't qualify for an upgrade or replacement under the scheme.

Ms Lynskey said doubts started to emerge when the assessor's software stopped working on the visit, so he was unable to demonstrate what he had done. She said the fact that he had only to complete a two-day course did not "instill any confidence".

She added: "The assessment fee is £99 and is supposed to be deducted from any work I get done, but what if I can't afford the interest rates?"

Ms Lynskey has not yet received her report or had the price projections, as the assessor has 28 days in which to complete them. But she said she remained concerned after the Department of Energy & Climate Change (DECC) said it expected the interest rate charged on Green Deal loans to be between 6pc and 8pc.

If home owners such as herself took out a loan to cover £5,000 of home improvement, this would mean she would have to achieve energy efficiency savings of £425 a year to cover the annual repayments. (This assumes an interest rate of 7pc and a 25-year term, meaning the total to be paid back would be £10,600. Some loans will be over shorter periods of time.)

Any money that is borrowed will be attached to your property's energy bill, rather than you as an individual. Should you move home, the debt does not move with you, but stays with the property.

These loans are effectively secured against your energy bills. So if you, or future owners of the property, stop paying, your utility company can cut the supply off. While the DECC is at pains to point out that no one's bills should rise as a result of the loan, and the annual energy savings should at least equal the loan costs, this does depend on whether the work done delivers the projected savings. And clearly having a loan repayment attached to your utility bill could have an effect when you come to sell your property.

"We haven't been told the amount of interest we will be charged. However, at every stage we have been assured that it would be competitive," said Ms Lynskey. "Had I known that the interest rate was going to be an average of 6.9pc, I wouldn't have bothered. I am going to get good insulation anyway, but the loan on offer is definitely not a good deal. I could get a better rate at Tesco."

A spokesman for the DECC said: "It's a bit misleading to focus narrowly on the interest rate when it is the total cost that matters. Accredited Green Deal assessments and the Golden Rule mean that customers will get the most cost-effective energy-efficiency measures for their property and should not pay any more for their energy bills than they do currently.

"It's worth remembering that the Green Deal is a long-term scheme, designed to run over the next few years and decades. It's not all about what happens in the first week."

In the next few months, we will be following Ms Lynskey and her partner in the Green Deal process to see what recommendations are suggested and whether it delivers the promised savings.